A highlight from Prof. Jacquelyn Pless, Assistant Professor at the MIT Sloan School of Management.
Jacqueline plus who is professor at mit sloan school of management listener teams which the economics of innovation energy and environmental economics. The jackie declan thank you. It's great to be here. Yeah thanks for doing this. Allow going to stop at one of you are actually video. Recent papers up to sierra complementary policies subsidiaries evidence mounting subsidies in the uk. You say government solve who subsidized private dot indeed using both direct subsidies and tax incentives and give a framework to assess sort of effectiveness of that policy. And if i'm to be jacqueline You're coming up the sort of different effects basement sites with flo. Yeah that's cracks yup What i do in this paper. Is i take a look at So the the background. Basically is that policymakers in governments in general they implements various policies in subsidies and tax incentives in an effort to try to drive innovation and research and development in the in the private sector to these these come in various forms but what is often kinda missed in the economics literature. Also the economics literature is largely focused on trying to understand the direct effects of each one of these different potential policy levers which has been phenomenal. Kind of space in the com- literature so far. But what is largely. Mrs how these different mechanisms are interacting even in practice in the way that they're designed but also in the context of how Firms might behave in response to the two when they do receive both sake grants and tax credits. And so what i do in that paper is i I try to take a look at estimate with data from the uk firms in the uk. I estimate the effect of essentially the interaction of those two different policies than do it separately for for small firms at larger firm since we would think that they kind of They face different constraints financing constraints and So we might just think that they respond to these types of incentives differently. Okay so so just for my understanding. Jackson auden gate. Grants is basically an award of cash. The flu can use this. A tax credits is something that That's gonna come back with them in credits after they have invested in our like Mechanistically out of these. These things work. Yeah great question. It's always good to know these things upfront. So sa- grants These things do operate a little bit differently depending on the context and the country and the policy program but they generally follow the following type of format and and certainly in the paper that i have written so for direct. Grants these exactly as you say. These would be kind of upfront. Direct cash payments and they're usually allocated or determined based upon some type of competition that companies can enter in order to win some of these grant funds so innovate. Uk's the program that i study and in that context they run various competitions that can be kind of mission focused in the sense that some of them might be specifically targeting clean energy innovation or health. It or something like that or a and then any company that is interested in receiving grant funding for a project that they have In that space or one that they are trying to get off the ground in those spaces they can essentially develop a project proposal which can entail expected costs and investments associated with that project.